The current fiscal crisis in the states and localities will trim $30 billion in cumulative IT spending over the next five years, according to a recent report by INPUT. This will come as states and localities try to come up with approximately $250 billion in new revenue and spending cuts to align their budgets to the levels that preceded the real estate boom of 2003-07. The compound annual growth rate (CAGR) for the state and local IT market has been reduced to 4.3% from the 6.4% announced by INPUT in its June 2008 forecast.
“We’ve seen so many projects held back in this quarter that we wanted to provide some concrete estimates for companies looking at 2009,” said Chris Dixon, manager, state and local industry analysis at INPUT. “State and local revenue projections from last spring just haven’t held up. Right now, this market needs federal fiscal relief for state Medicaid and unemployment funds to break the cycle of reactive policymaking. Then it needs the credit markets to loosen up so states and localities can sell bonds to fund capital projects, including major IT systems.”
A total of 37 states plus the
“Fortunately, states and localities have a lot of options available to them when it comes to increasing revenues and cutting spending,” added
These findings and others were released in an INPUT Industry Insight Report, “Fiscal Crisis Will Trim $30 Billion from State & Local IT Spending Over Next Five Years. ” More details are available at http://www.input.com/corp/library/detail.cfm?itemid=7938&cmp=OTC-slfincrisisii010709.